Exchange Rate

September 5, 1993 | ALLAN H. MELTZER, ALLAN H. MELTZER is the John M. Olin Professor of Political Economy at Carnegie-Mellon University in Pittsburgh and a visiting scholar at the American Enterprise Institute in Washington

The movement toward a European Monetary Union and a single currency for Europe reversed this summer. The core of EMU was a fixed exchange rate between French francs and German marks that was supposed to lead to a single currency for France, Germany and, at the very least, the smaller countries of northern Europe: Belgium, Denmark, the Netherlands and Luxembourg.

Economists estimate that of the roughly $10 billion a year Nigeria earns from the sale of its oil, about $500 million is spent by Nigerians on travel abroad. The figure represents about 5% of Nigeria's foreign exchange income and, analysts say, is disturbingly high, given the country's precarious economic condition. The primary reason for this, economists say, is the overvaluation of the Nigerian currency.

May 24, 1992 | ALLAN H. MELTZER, ALLAN H. MELTZER is John M. Olin professor of Political Economy at Carnegie Mellon University and a visiting scholar at the American Enterprise Institute. and

Late in December, 1989, the index of prices in the Tokyo stock exchange closed just below 39,000. This April, it fell below 16,000, a decline of nearly 60% in a little more than two years. Although the index rebounded from its recent lows, there is little chance that investors in Japanese stocks will see an early return to the once lofty values. The fall in the Tokyo market has wiped out all of the gains since 1986. But the Tokyo decline did not spread to the rest of the world.

President Alan Garcia's new government has devalued the Peruvian sol by 12% and frozen the exchange rate in an attempt to halt the currency's 250% decline over the past 12 months, the government news agency Andina reported Friday. "It is not possible to continue with the present system of mini-devaluations," Andina quoted Prime Minister Luis Alva Castro, who also is minister of the economy, as saying. "This has been the clearest sign of the instability of costs," Alva Castro said.

China on Wednesday said it will unify its cumbersome two-track foreign exchange system as of Saturday, thus edging the country a step closer to a fully convertible currency. It was a New Year's resolution bound to please foreign investors and tourists, and was widely hailed in the international investment community. The People's Bank of China, or central bank, announced the reform three weeks before U.S. Treasury Secretary Lloyd Bentsen is due to arrive here.

The dollar strengthened Wednesday against the Japanese yen and German mark, following a course established Tuesday when the Federal Reserve--in a surprise move--intervened in foreign currency markets and bought the dollar in concert with German, Swiss and Japanese central banks. The currency rose to its highest levels against the yen and mark in nearly six months after the intervention. In New York, the dollar was quoted at 97.78 yen in late afternoon trading, up from its 96.

Lt. Gen. Raoul Cedras, the military strongman here, recently obtained $500,000 from the Central Bank at a highly favorable exchange rate to finance a lobbying and publicity campaign in the United States against the return of President Jean-Bertrand Aristide, Haitian political and financial experts say.

It's hard to say how many travelers plan their vacations according to the rise and fall of the dollar. But right now, it's easy to tell those travelers where to go. Europe. Since last fall, the dollar has been gaining buying power against European currencies. And on Aug. 2, leaders of the European Monetary System loosened limits on trading rates, a move likely to lower interest rates in several countries. That, analysts say, is likely to give the dollar even more muscle in the months ahead.

With China's president set to arrive in Washington next week, Treasury Secretary Timothy F. Geithner on Wednesday laid out a list of concerns that he says the U.S. has with the rapidly rising Asian nation, including unfair government subsidies, theft of intellectual property and its undervalued currency. In a speech ahead of Hu Jintao's state visit next Wednesday, Geithner said that China presents "enormous opportunities for the United States. " U.S. exports to China, he pointed out, are growing at twice the rate of exports to the rest of the world.